The Dow Jones Industrial Average couldn’t maintain a 250-point rally going into the final hour of trading on Friday. During the session, we saw buyers that initially focused on blue-chip stocks and then shifted back to momentum names, leading the NASDAQ Composite higher.

Within the S&P 500, caution was the word, as Real Estate (XLRE) and Utilities (XLU) saw the largest gains in the session.

The Russell 2000 had the best performance of all large indices. It’s far too early to say if the index is ready to turn, although it bounced off a very pivotal point  of 1,300.

I like iShares Russell 2000 Growth (IWO), which holds:

• (ETSY) Etsy
• (FIVE) Five Below
• (TTD) Trade Desk Inc

There is so much to cover going into 2019. I will focus on the keys items and my predictions as the week goes on. I’m excited because I believe so much negativity and low expectations are baked into the valuations and psychology right now.

I don’t think the Fed will blow this, although I must admit Jay Powell & Co have been pretty headstrong. To me, they are working on a game plan from a bygone economic period. The Fed is bracing for inflation and building its arsenal, according to those in favor of their reckless communication. 

I find it odd the Fed could trigger a recession because it wants to be prepared to fight a recession.

As for the trade war, I feel more confident than ever there will be a resolution, and more and more naysayers feel the same way. It was almost surreal reading numerous articles in the current issue of The Economist, as they pointed to China’s big shift toward concessions. 

Like many elite financial publications and writers, The Economist has not only said the Trump administration couldn’t win a trade war with China, but they also cheered at a would-be setback.

They aren’t cheering anymore, and that’s great news for America.

Note:

Today is the last day for tax-loss selling, and while we are not accountants, feel free to touch base with your representative or research@wstreet.com.

There will be no Afternoon Note today. I want to say: have a Happy New Year and God Bless. Be ready to rock and roll in 2019. I’m very confident there is big money to be made.

Portfolio Approach

We’ve added a couple of new positions in the past few sessions, but we still want subscribers to have plenty of cash on hand.  If you are not a current subscriber to our Hotline service, contact your rep or research@wstreet.com.

Today’s Session

Equities are set to start the day higher, buoyed by news that the U.S. plans to send a delegation to China for trade talks next week.     

Canada Goose’s (GOOS) Is trading higher on reports of large crowds greeting the opening of the company’s first China store in downtown Beijing. 

Amazon (AMZN) is higher following news that it plans on expanding Whole Food store footprint across the U.S.